West Marine reports 2Q results - Trade Only Today

West Marine reports 2Q results

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Revenue at West Marine dropped slightly, compared with last year, to $236.5 million, and comparable-store sales decreased by 0.7 percent in the second quarter, prompting the company to lower its 2014 guidance.

The retailer now expects pretax income to be in the $8.5 million to $11 million range —$7 million lower than previously forecast—compared with $15.3 million in 2013.

"We were disappointed by second-quarter sales, which were about flat to last year,” West Marine CEO Matt Hyde said in a statement. “At the product level, we saw the strongest increases in our merchandise expansion categories, including paddle sports and women's clothing, but sales of core products were soft.”

“During the second half of the year we'll continue to reduce operating expenses to drive nearer-term profitability while continuing our careful investments in our strategic initiatives to drive long-term profitable growth,”Hyde said.

The company reported a profit of $18.3 million, or 75 cents a share, for the quarter that ended June 28, compared with $22.2 million, or 90 cents a share, in the second quarter last year.

Net revenue for the 26 weeks that ended June 28 was $349.8 million, a decrease of 0.3 percent from $351 million for the 26-week-period that ended June 29 last year.

Comparable-store sales decreased by 1.1 percent for the first six months of 2014, compared with the same period last year. During the first six months last year, the company reported a 4 percent decrease in comparable-store sales.

Sales were up 0.5 percent in e-commerce, an area in which the company is making a concerted push, and they represented about 7.2 percent of total sales—the same percentage as in 2013.

“We believe our e-commerce results so far this year were negatively impacted by implementation delays and fixes required in connection with the transition to our new e-commerce platform,”the company said. “We remain committed to our three to five-year goal for e-commerce to represent 15 percent of sales.”

Sales through optimized stores increased to 41.5 percent of total sales, compared with 34 percent last year. This year-over-year increase supports West Marine’s three- to five-year goal to deliver 50 percent of total sales through optimized stores.

Lastly, sales in expanded merchandise such as footwear, apparel, clothing accessories, fishing products and paddle sports equipment were up 12.1 percent, with core product sales down 2.2 percent, compared with last year.

“During the first half of 2014 our sales and gross profit results were lower than expected,”the company said. “Although we experienced solid gains in sales to our professional customers and in our merchandise expansion categories, our core product sales suffered and the shift in the product mix and customer type put pressure on our margins. Our core product sales tend to be dependent on boat usage and include boat maintenance items, sailboat hardware, electrical parts and boating safety products. Consequently, we are lowering our previously-issued sales and earnings guidance for fiscal year 2014.”

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